GM May Keep European Operations

General Motors Co. is now considering whether it should retain its Opel and Vauxhall operations in Europe, a strategic reversal that raises new questions about the struggling car maker's direction and creates complications with the governments of Germany and Russia.

GM's new board of directors has instructed the company's management to consider new options for Opel/Vauxhall, including pulling together a $4.3 billion financing plan to rejuvenate the operations rather than sell them, as had been the company's plan since this spring, said three people involved in the matter.

Chief Executive Frederick "Fritz" Henderson has been charged with putting the funding plan in motion by the next GM board meeting in early September, these people said.

The move follows a meeting last Friday in which the board rebuffed Mr. Henderson's recommendation to sell Opel/Vauxhall to a consortium of Canadian auto supplier Magna International Inc. and a Russian bank and car maker. The German government has promised to help finance that deal and it has received vocal support from the Russian government.

GM earlier leaned toward a bid for Opel/Vauxhall from RHJ International SA, a Belgian private-equity group. The German government voiced objection to the RHJ proposal, in part because it could result in higher job losses there.

The change in plans by GM — which is majority-owned by the U.S. government since its emergence from bankruptcy court last month — presents a potentially difficult diplomatic situation for the Obama administration. Germany and Russia, both key trading partners and countries the U.S. must cooperate with in foreign policy matters, want the Magna deal to go through.

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